Rainier Company Has a Purchasing Department That Provides Services to Two

question 16

Essay

Rainier Company has a purchasing department that provides services to two factories located in Carbondale and the other in Peoria. Budgeted costs for the purchasing department consist of $55,000 per year of fixed costs and $8 per purchase order for variable costs. The level of budgeted fixed costs is determined by the peak-period requirements. The Carbondale factory requires 40% of the peak-period capacity and the Peoria factory requires 60%.
During the current year, 1,800 purchase orders were processed for the Carbondale factory and 2,700 purchase orders for the Peoria factory.
Required:
Compute the amount of purchasing department cost that should be charged to each factory for the year.

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Definitions:

Private Pension Plans

Are prearranged plans administered by the organization that provides income to employees at their retirement.

Perquisite

Benefits or privileges provided to employees in addition to their regular salary, often seen as perks of the job.

Exclusive Country Clubs

Private clubs that offer recreational and social facilities to members, often characterized by selective membership processes.

Employee Assistance Plans

Programs offered by employers to provide confidential support services to employees dealing with personal or work-related problems.